Planning to buy your dream luxury property in Dubai, here is a list of five key things you need to know before stepping forward.
1. Should I buy off-plan or not?
Your first step is the decision as to whether to buy off-plan straight form the developer or through an agent, or indeed an already built property which would likely be a resale. Both of these scenarios will have pros and cons and notwithstanding the purpose of the purchase will have an impact on your decision.
2. Which property is the right property for you?
Firstly, if you are considering an off-plan property, you must take into consideration the track record of the developer and the quality of the build. Does the developer deliver properties on time with no delays, is there a clause in your contract with compensation if the developer does not deliver the property within the timeline agreed?
Also, does the property investment company have a show house or apartment so you can see the quality of the build and the workmanship, giving you the ability to visualise your own property once completed.
If off-plan is not for you, then of course the resale market is your next step. If you intend to purchase from a private seller, then of course it is better to use a broker who is registered to carry out completions on properties and will ensure that contracts are correct, and all the necessary paperwork is in order before you complete on a property. Licensed brokers will be registered with the Dubai Land Department (DLD) website, this will ensure by using a broker the title deeds are in the name of the seller and there is no debt on the property.
If you are looking to buy as an investment, we always find that in general studios and one-bedroom apartments have higher rental yields, more so than larger apartments and large villas. If the property is being purchased for personal use then you will already have a budget that you are working to and an area that is preferential to you and your family, taking into account travel to work, travel to schools (which is no joke on Dubai roads early mornings!) and of course the distance to retail areas and general shopping areas.
3. The Financials
You may find that you are able to get “pre-approved financing” which means you will know how much of a mortgage you are able to get prior to choosing a property. This of course is an ideal situation, as it will ensure you are not looking at properties which are outside of your budget and this obviously reassures the seller prior to the signing of the purchase agreement.
It is always advisable to do thorough research on issues such as responsibility of garden areas, communal areas such as children’s play grounds, service charges and any further development which may affect your property in any way, as this can of course have a bearing on your outgoings after purchase and your resale potential in the future.
Loans are given on a loan to value basis which generally will be on the basis of the bank giving its own valuation on the property or the expected value on off-plan property, however they may take into account the purchase price of the property but expect the loan to be on the lowest of the two valuations.
4. The Sales Agreement Process
On reaching an agreement for an off-plan property you will be required to sign a Memorandum of Understanding or a Sales and Purchasing Agreement, the developer will also sign.
The document will set out the terms and conditions of the sale and also the timelines for completion and any compensation that would be paid if the completion is delayed by the developer or by you for any reason also any time constraints that would be put in place by you or the developer, you should ensure that as well as in Arabic this is also in English so that you can completely understand what you are signing. Using a translator is not advised for legal and binding documents.
As a general rule the purchase agreement would have a clause whereby if completion does not take place within the timeframe agreed you would be entitled to a refund of between 5-15% of your security deposit as compensation.
If you are purchasing from a private seller then the purchase agreement between you and the seller will be registered with the DLD, again outlining all terms and conditions pertaining to the sale, the buyer can request an “opt out” clause in the agreement if the bank values the property less than the selling price (meaning the loan offer may be lower than expected) therefore indemnifying the purchaser against the loss of deposit laid down.
It is advisable to ensure the sales agreement does not include any additional charges within the sales agreement that you are not initially aware of.
A 10% deposit is normally paid to hold the property, usually in the form of a cheque.
5. Title Deeds
This is usually a very easy process; the title deeds transfer would take place either at the office of the Real Estate Registration Trustee or if you are buying off-plan it would be at the property developer’s offices.
The title deed will be in your name and you will receive this along with the keys and access cards to the new property.
